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Louisiana District Court Issues Nationwide Injunction Invalidating Federal Oil and Gas Leasing Moratorium

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On June 15, 2021, the U.S. District Court for the Western District of Louisiana addressed Section 208 of President Biden’s Executive Order 14008 (“Executive Order”), which instructed the Secretary of the Interior to “pause new oil and natural gas leases on public lands or in offshore waters pending completion of a comprehensive review.”1 The Executive Order, signed January 27, 2021, introduced the Biden Administration’s policies to address climate change.  In response to the Executive Order and the subsequent absence of lease sales pursuant to the Outer Continental Shelf Lands Act (“OCSLA”) and the Mineral Leasing Act (“MLA”), thirteen states2 sued and moved for a preliminary injunction to block the Department of Interior (“DOI”) and other federal agencies3 from postponing or rejecting new lease sales pursuant to the Executive Order. The lawsuit alleged that the “Pause” circumvented the requirements of the OCSLA and MLA and violated the Administrative Procedure Act (“APA”).

BACKGROUND

Oil and gas lease sales on federal lands are governed by the OCSLA and the MLA. The OCSLA, passed more than 70 years ago, directs the Secretary of Interior to facilitate the expeditious development of the Outer Continental Shelf (“OCS”) by selling exploration interests in portions of the OCS to the highest bidder pursuant to a Five-Year Leasing Program. Current lease sales in the OCS are governed by the 2017-2022 Five-Year Program, which was developed pursuant to a substantial vetting process that included millions of comments and approval from affected Governors, the President, Congress, and the Secretary of the DOI. The current Five-Year Program scheduled eleven potential oil and gas lease sales to occur during the program period, including Lease Sale 257 and 258.

The MLA similarly directs the Secretary of the Interior to hold lease sales of eligible lands at least quarterly. Under the MLA, fifty percent of bonuses, production royalties, and other revenues from oil and gas leases on federal lands are granted to the state in which the lease is located (except for leases in Alaska, where ninety percent of revenues go to the state).

RULING

Presidential Executive Orders are subject to judicial review. The President may exercise powers only as authorized by the Constitution or an act of Congress. The U.S. District Court of Alaska held in 2019 that the OCSLA authorized the President to withdraw unleased OCS lands from disposition, but it did not authorize the President to revoke a prior withdrawal. Therefore, because Congress had not specifically granted such power, it remains solely with Congress.4 Similarly, the power to “Pause” leases was not granted to the President in the OCSLA and, as such, that power lies solely with Congress.

Standing

The Government Defendants argued that the Plaintiff States lacked the injury-in-fact and redressability requirements necessary to establish standing. Government Defendants claimed that no harm had been done because development activity on existing leases continued, and over half of currently leased land was not yet producing. Government Defendants pointed to the fact that drilling permits are being granted at the same rate as prior administrations. 

The Court, however, recognized that Plaintiff States suffered a cognizable injury in that the Pause in lease sales deprived them of their share of the proceeds from such sales under the OCSLA and MLA. Further, the Pause could lead to a reduction in oil production, resulting in higher oil and gas prices, the loss of jobs, and damage to economy. This injury could be redressed by granting an injunction compelling the Agency Defendants to continue lease sales required by the OCSLA and MLA.

Administrative Procedure Act

The Court held that the Plaintiff States had standing under the APA because (1) plaintiffs were within the “zone of interests” to be protected by the statutes; (2) the statute did not preclude judicial review; (3) the agency action constituted a “final agency action;” and (4) the Pause was not “committed to agency discretion by law.” Though the Government Defendants argued the postponements of lease sales were not decisions to forego the sales entirely and, thus, not final agency actions, the Court found that the Pause was an action from which legal consequences will flow and constituted the consummation of the decision-making process. In support, the Court cited numerous prior decisions holding that final agency action need not be permanent.

Lastly, the Court held that the OSCLA and MLA granted no discretion to stop or pause lease sales pursuant to the Executive Order. Rather, under OSCLA, the DOI must sell exploration interests in portions of the OSC to the highest bidder pursuant to the existing Five-Year Program. Any significant changes to the Five-Year Plan would require the DOI to go through the same procedure by which the Plan was originally developed, including extensive notice and comment. Similarly, the Court noted that the MLA requires the DOI to hold lease sales for eligible lands every quarter. Agencies may cancel or suspend lease sales only due to problems with the specific lease, such as environmental issues that make the lands ineligible. Thus, the Court held that the Pause on lease sales for no reason other than the Executive Order’s instruction were a violation of the OSCLA and MLA.

The Existence of a Pause

To obtain a preliminary injunction against the Pause on new lease sales for violating the APA, the Plaintiff States were required to demonstrate there was in fact a Pause on such sales based upon the Executive Order.

Lease Sale 257 (concerning Western and Central areas in the Gulf of Mexico) was expressly rescinded, and Lease Sale 258 (concerning the Cook Inlet area in Alaska) was postponed in response to the Executive Order, despite both sales being scheduled to occur under the Five-Year Plan. Though the Government Defendants contended that no lease sales under the MLA have been cancelled or postponed in response to the Executive Order, they conceded that there have been zero new sales completed under the MLA during the first two quarters of 2021. A number of scheduled lease sales under the MLA have been postponed purportedly due to environmental concerns, or for no stated reason.

The Plaintiff States allege the administration’s reasoning for postponements of MLA lease sales, namely the need for further environmental analysis, were pretextual. The Court found that there was in fact a Pause on lease sales pursuant to Executive Order 14008.

Preliminary Injunction

The Court granted a preliminary injunction based on the Plaintiff States’ showing: (1) of a substantial likelihood of success on the merits of their claims, (2) that they were likely to suffer irreparable harm in the absence of a preliminary injunction, (3) that the balance of equities weighed in their favor, and (4) that an injunction was in the public interest.

The Plaintiff States asserted that the Defendants violated the APA by (1) acting contrary to law in violation of 5 USC 706(2)(A) and (C); (2) acting in an arbitrary and capricious manner in violation of 5 USC 706(2)(A); (3) failing to provide notice and comment required by 5 USC 553(a); and (4) unreasonably withholding and unreasonably delaying agency required activity in violation of 5 USC 706(1).

The Plaintiff States showed a substantial likelihood of success on the merits for each of the APA claims. As discussed, the Pause was a violation of the MLA and OCSLA and, thus, was contrary to law and a violation of 5 U.S.C. 706 (2)(A) and (C). Because the Executive Order, the cancellation of Lease Sale 257, and the postponement of Lease Sale 258 provided no rationale for departing from the OCSLA and MLA requirements, the Court held that the Pause was arbitrary and capricious, in violation of 5 U.S.C. 706(2)(A).

Finally, the Government Defendants violated the APA requirement to provide notice and comment for the Pause and lease cancellations because the decision represented an adoption of a substantive rule. The Court held that exceptions to the notice and comment requirement of 5 U.S.C. 553 for interpretive rules, general statements of policy, or rules of agency organization, procedure, and practices did not apply because the Executive Order required the DOI to stop performing its obligations under OCSLA and MLA without leaving the agency free to exercise discretion. Thus, the Pause was a substantive rule requiring notice and comment.

The Court found that the Plaintiff States were substantially like to prevail on the merits of a 5 U.S.C. 706(1) action to compel the Government Defendants to complete the postponed lease sales and to conduct sales of eligible onshore leases because such actions were “discrete agency actions” that the Government Defendants were required to take under the Five-Year Program and MLA.

As for irreparable injury, the Plaintiff States demonstrated that the Pause would result in substantial loss of the proceeds from the sales—loss that could not be recovered from the Government Defendants due to sovereign immunity. The Court further found that the threatened harm the Pause presented to the Plaintiff States outweighed the harm that would result to the Government Defendants if an injunction were issued, because such an injunction would only require the Government Defendants to again perform statutorily mandated duties. Lastly, the Court found that public interest is served when the law is followed and, thus, the public would be served if Government Defendants were enjoined from taking actions contrary to law.

CONCLUSION

Ultimately, the Court held that the Plaintiff States satisfied all four elements required for a preliminary injunction to be issued. Though nationwide injunctions are not favored unless “absolutely necessary,” the Court found that a nationwide scope was necessary because of the need for uniformity in the lease sales occurring across the nation.

TAKEAWAYS

Several key takeaways from the ruling include:   

  • Procedure. Current lease sales on the Outer Continental Shelf (OCS) are governed by a 2017-2022 Five-Year Program.  That program went through extensive notice and comment procedures, with millions of comments received and considered before it was finalized. Similar procedures are in place for lease sales on onshore public lands under the Mineral Leasing Act (MLA).  The Court’s decision suggests that a wholesale pause of leasing through such programs should − at a minimum − go through the same procedures, or may require Congressional action to amend OCSLA and the MLA.  Much of the Biden Administration’s agenda is going through the traditional notice and comment procedures under the APA.  This ruling suggests that federal courts will continue to push back on the ever-growing use of executive orders alone to implement presidential policy priorities where formal regulation and/or legislation has been the norm in the past.

  • What Pause? The federal government denied that there even was a pause on all leasing activities, citing its continued granting of drilling permits on existing leases at a pace roughly equivalent to historical experience.  Indeed, industry’s greatest concerns over a potential drilling moratorium on federal lands and waters have not been realized so far in the Biden administration.  However, the Court noted that drilling and permits on existing leases does not speak to pausing or canceling future leases.  This argument may have hurt the government’s credibility both in this case and going forward in the individual instances in which it asserted specific environmental concerns, rather than the executive order itself, as the basis for its lease sale cancellations.

  • Irreparable Harm. Coalitions of states have filed several lawsuits, including this one, challenging the administration’s initial energy and environmental policy actions. Although these suits often sound similar themes and legal arguments as to APA violations, the nature of the harm could be a critical driver of how courts approach each case.  Here, the States made much of the argument that the revenues from leasing on federal lands and waters fund critical state programs, especially Louisiana’s coastal restoration program.  Ordinarily, monetary harm does not constitute irreparable harm, but the Court’s decision indicates that where sovereign immunity prevents a plaintiff from recovering such damages, harm is irreparable.

  • Nationwide Injunctions. The Court found it necessary to issue a nationwide injunction given that the governments’ lease sales concern public lands and offshore waters across the nation and the need for uniformity.  The Court specifically ordered that the federal agencies at issue are enjoined from (1) “implementing the Pause of new oil and natural gas leases on public lands or in offshore waters as set forth in Section 208 of Executive Order 14008,” both onshore and offshore, and (2) “implementing said Pause, with respect to Lease Sale 257, Lease Sale 258, and all eligible lands onshore.”  Issuance of nationwide injunctions against executive orders took on new prominence during the Obama Administration, and that trend continued with even greater force during the Trump Administration.  It appears likely to continue as federal judges review Biden Administration executive orders.  Indeed, many of the cases cited by the Court in support of its action were cases in which federal courts invalidated Obama and Trump-administration orders.  The federal appellate courts and even the Supreme Court are likely to further develop the law on this topic.

  • Practical Effects. The federal government argued that the States had no redressable injury because the only remedy would be for the court to remand to the agencies for further consideration, in which case the agencies could “come up with another reason” for taking the same actions.  First, this seemed to be a significant admission that may have driven the Court to choose not to vacate and remand to the agencies, and instead to issue an injunction compelling the agencies to continue with their prior leasing plans and to pause the Pause.  Second, the government’s argument suggests that, perhaps even in the face of this injunction, the federal agencies might develop a new and fuller record to support various lease sale cancellations going forward (including offshore Lease Sales 257 and 258 were delayed by the Pause), likely on an individual basis due to environmental reviews.  This could be similar to the federal government’s actions in response to a Louisiana federal court’s enjoining of the Gulf drilling moratorium after the Deepwater Horizon event, in which the DOI promptly implemented a new, narrower moratorium in response to a court’s ruling.  Finally, if the Court’s nationwide injunction is upheld on appeal, any future lease sale cancellations may be scrutinized more closely for potentially pretextual reasoning.


1 E.O. 14008 of Jan 27, 2021, https://www.federalregister.gov/documents/2021/02/01/2021-02177/tackling-the-climate-crisis-at-home-and-abroad.

The Plaintiffs States in the action are the States of Mississippi, Texas, Alaska, Missouri, Nebraska, Utah, Alabama, Montana, Arkansas, Louisiana, West Virginia, Oklahoma, and Georgia.

Government Defendants consist of Joseph R. Biden, Jr.; Deb Haaland, Secretary of the Interior; Michael Nedd, Deputy Director of the Bureau of Land Management; Chad Padgett, Director of the Bureau of Land Management Alaska Office; Raymond Suazo, Director for the Bureau of Land Management Arizona Office; Karen Mouristen, Director for the Bureau of Land Management California Office; Jamie Connell, Director for the Bureau of Land Management Colorado Office; Mitchell Leverette, Director for the Bureau of Land Management Eastern States Office; John Ruhs, Director for the Bureau of Land Management Idaho Office; John Mehlhoff, Director for the Bureau of Land Management Montana – Dakotas Office; Jon Raby, Director for the Bureau of Land Management Nevada Office; Steve Wells, Director for the Bureau of Land Management New Mexico Office; Barry Bushue, Director for the Bureau of Land Management Oregon-Washington Office; Greg Sheehan, Director for the Bureau of Land Management Utah Office; Kim Liebhauser, Director for the Bureau of Land Management Wyoming Office; Amanda Lefton, Director of the Bureau of Ocean Energy Management; Michael Celata, Regional Director of the Bureau of Ocean Energy Management Gulf of Mexico Office; Lars Herbst, Regional Director of Bureau of Safety and Environmental Enforcement Gulf of Mexico OCS Office; and Mark Fesmire, Regional Director of the Bureau of Safety and Environmental Enforcement Alaska and Pacific Office.

A motion to intervene by Conservation Groups consisting of Healthy Gulf, Center for Biological Diversity, Cook Inletkeeper, Defenders of Wildlife, Friends of the Earth, Natural Resources Defense Council, Oceana, Sierra Club and The Wilderness Society was denied.

Amici Curiae briefs were filed by the County of Daggett, County of Rio Blanco, County of Uintah, and County of Wayne as well as the Center for Biological Diversity, Cook Inletkeeper, Defenders of Wildlife, Friends of the Earth, Healthy Gulf, National Resources Defense Council, Oceana, Sierra Club, and Wilderness Society.

League of Conservation Voters v. Trump, 363 F. Supp. 3d 1013 (D. Alaska 2019).

 

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